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Should the American auto companies be saved?

Should the American auto companies be saved? Will their demise affect the defense of the country? Will the resulting unemployment sink the American economy forever? Would you drive a Korean, Chinese or Indian car?

The Big 3 auto makers should be able to stand on their own 4 wheels. If they can't, then we will always be bailing them out. I say, "let the free market reign". When they do eventually go bust, it will create opportunity for new smaller domestic auto mfgs. Same for banks, why should we prop them back up? Plenty of good solvent banks to go around. Banks like Citi, BOA, WaMu, Wells Fargo need to go away!

Should the American auto companies be saved? Will their demise affect the defense of the country? Will the resulting unemployment sink the American economy forever? Would you drive a Korean, Chinese or Indian car?

I'm happy with my Toyota. The only other makes I consider are Honda and Subaru.

Are the union commitments partly responsible for the downturn in the big three? Is it poor planning on management to not foresee the need for fuel efficient cars even though sales were brisk for the other models? Is management ultimately responsible? Would the government help, actually be helpful? Without the force of personality of a Lee Iacocca to turn things around, would the bailout money actually be wasted by the current management? There is plenty of blame to go around, but right off, if GM is losing money and Toyota is making money, there is a problem.

I am not sure it is possible to save the big three.

Yes, it will affect the economy.

Yes, it will affect the defense of the nation.

If anyone thinks it should be saved, are you driving an American car badged by the big 3? I expect, in the end, the way to save the big 3 is to buy one.

(Sarcasm button on)I expect congress will be best served by taking GM from the corporate executives and stock holders, mandating that all debt be forgiven and just give it to the union bosses.(Sarcasm button off)

BTW, I did not vote in the poll yet (I may later).

BTW2, I am driving a Ford F150

Last edited by subroc; 02-28-2009 at 10:05 AM.

subroc

Article [I.]
Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.
Article [II.]
A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed.

Me too. When I purchased my new truck a little over a year ago, I also looked at the new Tundra. I liked the Ford better.

The problem with Detroit is not their trucks. GM's 1500 pickup saved them from bankruptcy in 93. Chrysler has come a long way in the last 12 years with thier trucks. Problem is they can't sell thier passenger cars. They are just not competitive with the Asian companies. That is both a Labor(quality) issue and Mangement(planning) issue. Maybe if Detroit just concentrated on trucks and SUV's they could export more and dominate in that arena.

I have a lot of mixed feelings on this one. I am originally from Michigan. Those of my family and my wife's family that didn't farm worked for the auto companies or their suppliers. I make frequent trips to the "Auto Zone" and the I come home to Minnesota more depressed every time.

The How-we-got-there's are really a complex mix. There are way to many elements to cover them all here. But , I will lay out a few.

First, was down out right arrogance on the part of management. Charlie Wilson, President of GM was fond of saying "What is good for General Motors is good for the country." When the mechanics started to report that Toyota's were very reliable, they looked down their noses and viewed the rice burners as fad cars. GM still continues to live in the past and is resistant to change.

The companies were not interested in good relations with their workers. Often this lead to labor stoppages and sabotage. Although Ford and Chrysler eventually learned from their Japanese partners, GM still has problems. GM's Management still refers to its workers as "shop rats".

Often labor negotiations leave basic issues unaddressed and are settled by throwing money and packages at the unions. It feels good for a week or two but basic grievances are unresolved and things go back to the same old same old.

Health care is a real profit killer and this must be addressed if the industry is to survive.

Some of industry's problem was just poor engineering. Remember the Chevette transmissions in Chevrolets and Cadillacs? Or the Corvair? It is not that they can't market good cars here--they won't. American car companies make European models that are plush, reliable, and get terrific milage. Here, they make compact cars deliberately chinsy so you will look at that mega boat across the room.

The car companies often take over local government by insinuating management on to governance boards, keeping the company's tax burden low and competing industries out. When they leave they leave, the towns are unable to survive. Flint, MI is becoming a ghost city.

As they exist NO, but they have areas where their product outcompetes. Small trucks, we own a 06 duramax & an 08 Uplander (minivan) & are happy with both. That also probably has a lot to do with our local dealer being customer friendly. But I do not want to get to the point that there is no competition domestically in the pickup market. The car companies can get very arrogant when times are good.

I am driving a Silverado that I just got 6 months ago. I would hate to see GM go under, but I hate even more to see the goberment give them money. They have not adapted and will probably die soon anyway no matter how much money we throw at them. Without the big three in the picture someone will step up and build a car/truck that people want and that the maker can make money on. The American car building system is broken and maybe the best way to fix it is to let it fix itself

Views and opinions expressed herein by Badbullgator do not necessarily represent the policies or position of RTF. RTF and all of it's subsidiaries can not be held liable for the off centered humor and politically incorrect comments of the author.
Corey Burke

Letting the free market rain is fine but you have to accept the reality that another firm may not pop up in their place. We may loose it all together. There is a very large entry barrier to car manufacturing. Most large firms like that only pop up in the infancy of the industry when the competition is small and growth is large or when there is an isolated market like Japan after the war. This is for several reasons for this including:

1. Economies of scale: if you make 100 cars the cost will be 100,000 each, if you make 100,000 cars the cost is 20,000 each.
2. Need for a service infrastructure. Mechanics need to be trained and there needs to be a 3rd party parts system.
3. Brand and Name recognition need to be developed to compete.

So if you want to start a car company it would take what 5 Billion plus. It is very had to do this and very risky and likely no one would enter.

Ford will most likely make it. I would provide funding but only if Chrysler and GM merge. It is easier to keep them then to hope another industry will pop up and employ 500,000 people (GM + Parts and service networks). Honestly though. If you let Chrysler go bankrupt then give GM 10 Billion to fund ops and to acquire Chrysler, and with the economic hard times they really hammer out a good deal with the unions, and strip down the product lines to only the best ones, in ten years GM could be a very viable company. Also both companies have really closed the quality gap and have made strides in the design area.